SINGAPORE — Consumer prices in Singapore grew at a slower pace of 1.8 per cent last month when car prices moderated while most major categories also reported smaller increases, latest official inflation data showed.

“Private road transport cost edged up by 2.8 per cent in June, a smaller rise compared to the 8.1 per cent surge a month earlier, largely due to the sharp correction in Certificate of Entitlement premiums in May,” the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said when announcing June’s Consumer Price Index (CPI) figures today (July 23).

Last month’s overall inflation was lower than the 2.4 per cent rise forecast in a Reuters poll and slowed down sharply from May’s 2.7 per cent, which was the highest since March 2013 as car prices surged on-year to reflect the end of a low-base from the same period last year.

While private road transport costs – which account for around 11.6 per cent of the CPI basket – have normalised, domestic cost pressures still remain the primary source of inflation amid the tight labour market, the MAS and MTI cautioned.

Reflecting that concern, prices of both non-cooked and prepared meals rose higher in June, pushing food inflation to 3.2 per cent last from May’s 3 per cent. But services inflation eased to 2.2 per cent from 2.5 per cent in the previous month.

Accommodation cost also rose at a slower pace, down from May’s 0.9 per cent to 0.5 per cent last month, “as imputed rentals on owner-occupied accommodation picked up modestly”, the MAS and MTI added.

Against this backdrop, the authorities retain their inflation forecast, flagging a 1.5 to 2.5 per cent rise for full-year, all-items inflation. But with persistent labour woes and surging business costs, core inflation – which excludes accommodation and private road transport costs – will stay elevated in 2014, at 2 to 3 per cent.